Case ID. This is the doctrine that a company is a separate and independent legal person, which is distinct in law from its members. The relatively short judgment in the United Kingdom Supreme Court case of Prest v Petrodel Resources Ltd1 (herein, Prest) has garnered vociferous interest from academics and practitioners. introduction The recent decision of the Supreme Court in Prest v Petrodel Resources Ltd 1 has clarified and restricted the circumstances in which the corporate veil between those dealing with companies and those operating them can be pierced so that the latter can made liable to the former instead of liability stopping with the company itself. 34 William Day, “Skirting around the Issue: The Corporate Veil after Prest v Petrodel”. in many evasion cases – indeed, evasion is commonly achieved. short, after Mr and Mrs Prest divorced, Moylan J. awarded Mrs Prest a sum of £17.5 million as a fair division of Mr Prest’s assets. Introduction. In so doing, the court will consider who are the individuals, as shareholders, directing and controlling the activities of the company. Mr Prest was a wealthy businessman operating in the oil sector. Neutral citation number [2013] UKSC 34. 136 - see Gencor and Trustor cases re piercing the veil to impose liability on the company for the controller’s liability as Mrs Prest sought in Prest v Petrodel. Since Salomon v Salomon, 1 it has been well established in UK law that a company has a separate personality to that of its members, and that such members cannot be liable for the debts of a company beyond their initial financial contribution to it. It came as little surprise that the Petrodel group companies challenged the first instance decision in the Court of Appeal. In part satisfaction of this sum, the judge ordered three Petrodel group companies to transfer the seven properties in question to Mrs Prest. Para. Prest v Petrodel Resources Ltd & Ors [2013] UKSC 34 (12 June 2013) March 22, 2018/in Company /Private Law Tutor. Facts. Prest v Prest [2015] EWCA Civ 714. 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It is important to bear in mind the principles in Prest when considering the complexities of offshore corporate investments in divorce settlements. In doing so, the Supreme Court has ordered divorced husband, Michael Prest, to transfer to his former wife, Yasmin Prest, properties held by companies owned and controlled by him, as part of a £17.5m divorce award. Prest v Petrodel Resources Ltd and Others: SC 12 Jun 2013 In the course of ancillary relief proceedings in a divorce, questions arose regarding company assets owned by the husband. short, after Mr and Mrs Prest divorced, Moylan J. awarded Mrs Prest a sum of £17.5 million as a fair division of Mr Prest’s assets. As the legislation is so similar, Hong Kong courts often look for guidance in England. Plainly, the decision will also be of note to those engaged in advising high net-worth individuals in relation to their marital affairs. Indeed, the court found that Mr Prest took steps to conceal details of his wealth from the court and demonstrated flagrant disregard for court orders to provide corroborative information of his personal and commercial interests. However, as in the case of VTB, the court could not be persuaded to pierce the corporate veil. In this context, Lord Sumption sheds further light on the doctrine of abuse of corporate personality under English law. The Court of Appeal rejected this approach in Prest. 12 Jun 2013. Judgment details. John Wilson QC of 1 Hare Court analyses the Supreme Court’s judgment in the landmark case of Prest v Petrodel and considers its implications for family lawyers. She is a matrimonial lawyer dealing with all aspects of family law, information management, legal writing and publications. ... of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is … The Supreme Court has handed down a landmark judgement in favour of Mrs Prest in high profile matrimonial dispute. The Supreme Court has just handed down its judgment in the landmark case of Prest v.Petrodel. The Supreme Court ordered that seven disputed properties, owned by companies controlled by Mr Prest, be transferred to Mrs Prest in partial satisfaction of their £17.5 million divorce settlement. Many of the assets (primarily properties in London) were held by overseas companies controlled by the husband. As well as cases of fraud and other wrongdoing in the course of business, the other area in which the courts have most frequently been asked to be creative in their approach to companies has been in the family division of the High Court in divorce cases. Prest v Petrodel – a new court approach to corporate structures Background Prest v Petrodel was a “big money” divorce case, concerning assets worth in excess of £17.5million. company law after Prest v Petrodel decision Ariel Mucha The Supreme Court case Prest v Petrodel Resources Ltd [2013] 2 AC 415 addresses the issue of … Following decisions at first instance and on appeal, the Supreme Court reached a unanimous decision that it would be contrary to prior authorities and principles to extend the circumstances in which the corporate veil can be pierced. The court was asked as to the power of the court to order the transfer of assets owned entirely in the company’s names. Big enough to handle the most complex matters. The article examines many issues relating to the rule and the corporate personality doctrine. The Supreme Court in Prest v Petrodel was also concerned with achieving justice for the claimant, and in the VTB case Lord Neuberger said: ‘it may be right for the law to permit the veil to be pierced in certain circumstances in order to defeat injustice’. The Supreme Court held that even though the companies were the legal owners of the … Post Prest cases such as R v McDowell and R v Singh shows that the superior courts exercising restraint in disturbing the principle in Salomon. This is largely as a result of the case of VTB Capital Plc. Facts The parties, who had four teenage children, separated in 2008 after 15 years of marriage. ... of cases where the abuse of the corporate veil to evade or frustrate the law can be addressed only by disregarding the legal personality of the company is consistent with authority and long-standing paradigm examples of the “concealment” principle in application), it is. As with Prest, the court looked specifically at whether the husband had been able to use, had control over, and had an interest in the Hong Kong companies, the shares of which were placed offshore, pre allotment and post allotment. The fact that Mr Prest had sought to conceal this fact in evidence, and that both he and the companies failed to cooperate with disclosure, permitted the court to infer that Mr Prest and the companies were attempting to hide the true beneficial ownership of the properties. [2014] LMCLQ 269. The value of the judgement was not in question, as the courts had already ruled the husband – a Nigerian oil tycoon – would have to pay his wife £17.5m, largely due to his conduct during the case, and he was not arguing over this. Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415 is a leading UK company law decision of the UK Supreme Court concerning the nature of the doctrine of piercing the corporate veil, resulting trusts and equitable proprietary remedies in the context of English family law. In reaching its decision, the court had to consider the law surrounding the piercing of the corporate veil. Day, W (2014) Skirting around the issue: The corporate veil after Prest v Petrodel. The judgment is important for businesses holding assets which could be vulnerable to pursuit by spouses in divorce proceedings. Instead, overturning the High Court decision and following various authorities the Court of Appeal held that the corporate veil should only be pierced in very limited circumstances, that is: On 12 June 2013, seven members of the Supreme Court allowed Mrs Prest's appeal. However, in applying those exceptional circumstances, the Supreme Court held Mr Prest had not deliberately attempted to stymie Mrs Prest's claim. Mujih E, 'Piercing the corporate veil as a remedy after Prest V Petrodel resources Ltd: Inching towards Abolition' [2016] Westlaw 17,17. Claim by Mrs. Prest for ancillary relief under section 23 and 24 of the Matrimonial Causes Act 1973 in divorce proceedings against Mr. Prest. to hide behind the corporate veil) for improper purposes; and/or. Prest and Beyond – Part 1 and Part 2 (Companies) 1. UKSC 2013/0004. Philippa is a professional support lawyer in the divorce and family. The court found that he had access to the underlying assets of their subsidiaries and his personal connection with one of the companies in particular was manifest – the company held the property which housed his children rent free, the office where he kept his collection of classic cars and provided all the family expenses including his mother-in-law’s credit card expenses. In cases where the ostensible title to company assets is established, the Supreme Court has demonstrated that an attempt to deceive the court could result in inferences being drawn which may precipitate the transfer of those assets, even where the corporate veil remains firmly in place. articulated by Lord Sumption in Prest v Petrodel Resources Ltd [2013] 3 WLR 1 (“Petrodel”) in the light of recent English and Singapore case law and, in particular, to interrogate the notion of veil-piercing as a remedy of last resort, as well as the concealment and … The case of Prest v Petrodel has been long awaited because of its potential to re-shape the law in relation to the piercing of the corporate veil. In 2011 a High Court ruling ordered Mr Prest, the founder of a Nigerian oil business Petrodel Resources Ltd, to transfer 14 properties which were tied up in his businesses to Yasmin Prest … Here, the husband alleged that he had no beneficial interest in the legal title to shares held in the companies, which, again, held assets which were located onshore but held in offshore companies. Both sides of the profession were affected differently. The issue of beneficial ownership often comes before the courts in Hong Kong for cases where assets are held on behalf of other family members or through corporate or trust structures. The case concerned a very high value divorce.. Judgment (PDF) Press summary (PDF) Judgment on BAILII … Prest v Petrodel Resources Ltd emphasises the importance of properly and transparently running companies. The value of the judgement was not in question, as the courts had already ruled the husband – a Nigerian oil tycoon – would have to pay his wife £17.5m, largely due to his conduct during the case, and he was not arguing over this. Case ID. Although the case revolved around a dispute concerning financial provision on divorce, the decision has potentially wider implications. In 2013, the case of Prest v Petrodel [2013] UKSC 34 left the family law fraternity debating and divided. Justices. Prest was of particular interest because of the legal cross-over between family law and corporate law. Sir Michael Birt endorsed this more restrictive test and concluded that in the circumstances of the case there was no basis for piercing the corporate veil. The case clarifies the fact that it is possible to lift the corporate veil, but only in a small category of cases where a company has been created or structured in some way to frustrate the law. introduction The recent decision of the Supreme Court in Prest v Petrodel Resources Ltd 1 has clarified and restricted the circumstances in which the corporate veil between those dealing with companies and those operating them can be pierced so that the latter can made liable to the former instead of liability stopping with the company itself. The court found that the manner in which the seven properties had become vested in the Petrodel group companies meant that, in fact, the properties were held on trust for Mr Prest, such that he was their beneficial owner. The Court of Appeal held that the family court should not allow the properties to be taken into account in the division of assets because the companies were the beneficial owners of the properties and upheld the company law principle that there is nothing special about family law and the courts cannot pierce the corporate veil. The background to these proceedings is extensive and, indeed, is well known to those who practise family law, in consequence of an earlier sequence of appeals which brought the case before the Supreme Court (Prest v Petrodel Resources Ltd. [2013] UKSC 34; [2013] 2 AC 415). VTB's case was that, inter alia, the loan facility agreement should be enforced against individuals who were not party to it, which VTB argued could be achieved by piercing the corporate veil. The circumstances in which property held by a company can be attributed to those who control it gained considerable publicity in Prest v Petrodel Resources Ltd & Others [2013] UKSC 34.The case played out … INTRODUCTION Rogers AJA in a New South Wales case commented "there is no common, underlying principle, which underlies the occasional decision of the courts to pierce the corporate veil". In reaching its conclusion, the Supreme Court confirmed that the Court of Appeal's analysis of the circumstances in which the corporate veil may be pierced was correct. The corporate veil is a metaphorical phrase, established in the landmark case of Salomon v Salomon & Co Ltd 6 . However, there have been … Prest v Petrodel raises issues about what structures can be utilised and Akzo Nobel in what structures companies can establish notwithstanding that such structure are common place. Prest v Petrodel. Published by Adam Forster, Senior Associate. Professional Support Lawyer, Withers Khattarwong. In some instances the properties had been It therefore appears that where litigants can show that the relevant tests are satisfied, the courts will allow them to obtain judgement against assets that were intentionally placed out of their reach. Justices. Court in Prest v Petrodel Resources Ltd. On 12 June 2013, the court unanimously overturned the decision of the Court of Appeal and ruled against a wealthy oil tycoon, Michael Prest, ordering that seven properties vested in Petrodel Resources Ltd be … The Supreme Court ordered that seven disputed properties, owned by companies controlled by Mr Prest, be transferred to Mrs Prest in partial satisfaction of their £17.5 million divorce settlement. Lawyer dealing with all aspects of family law and corporate law section 23 24. Question to Mrs Prest long-held company and trusts law principles first instance decision in the landmark case of v! 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